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tv   [untitled]    January 10, 2014 2:30pm-3:01pm PST

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>> okay. >> and as lisa mentioned it's very difficult to fill these kind of positions, but depending upon what the recommendation on some of the other contracts, large contracts, it may require having more data analytics staff with the changes that are planned, long-term changes of the city having do to with emerge we may need more staff, so it's those kinds of things. >> well, i only cite that because as we go through the processes i think we think they're administratively impacting in a neutral way, and i think it needs to be highlighted that the more complexity that we bring to plan design, plan administration and so forth it has these impacts and we shouldn't sort of like
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bury it. we need to be -- make sure that's visible. i know that you guys are not quanderringing the assets of the plan or the trust and that but as we're doing these things and even those they seem administratively simple many times they have these consequences and i wanted to to highlight that. >> >> thank you. one of the things we will look at is our analytic sho. we hired the manager lorena coalridge to do that and she has two analysts and 100% of the time on the system so we have minimal analytics on the areas where we need to be looking and that is one of the examples of the areas we want to spend more -- request additional support for. >> any other comments? any
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other questions? thank you. that was a great presentation. >> thank you. >> any public comment on this item? >> hi health board. this is the first time in this meeting. okay i was walt on dr. dean o'dell. what's on your mind walt? walt, what's going on -- retired now but i miss that budget saving advice and i know one thing that is true without bud, without this we have nothing. without health you have nothing, nothing at all. you may have conquered the budget world, but one thing it did not have without budget,
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budget, without health yiew you've got nothing, nothing at all. thank you. good luck. >> thank you. and he does that extra temp rainiously by the way. ever watch watch the board of supervisors? catch beat that. i am claire zvanski and one thing that was mentioned and when the assets in the trust fund go up it clicks someone's bulb in another -- i'm not wired -- in city hall and they want to encourage us to somehow spend more of our trust fund dollars
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on our operating expenses and we usually have that discussion in the city. why -- you can pay for this out of the trust, you can pay for this out of the trust. you can transfer a lot of those expenses and while prop c opens some of the doors and there's more opportunities to fund some things from the trust there is also a restriction that items from the trust really need to be for the full membership and that ultimately it was always my goal that trust fund could help us become self sufficient at some point in the future and every time that we've had these financial situations where we're encouraged to discount more to the city and bleed down that trust fund we stepped back and we've stepped back any number of times over the last 30 years that i remember so i am urging you all to keep a firm line and make sure the language in the charter that says the city must fund
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and provide the administration and understand the real needs of serving 110,000 people and everyone that works in the city and whoever did that that's really a vital obligation and the support must come from the city and beg the budget but people need to understand it's critical and as commissioner scott pointed out as they look at certainly kinds -- what is it? traditionally ignored or augmentation to deal with the changes and as we add to the boths as well as the work that we do increasing the eap and i'm going to send an email about the history of that because i was involved with the eap for 20 years on the side to try to get them better staffed et cetera. there is a history there. as we look at the benefits we need the expertise and we need it
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internally so we're not reliant on outside sources so i want us to keep that in mind that we have to hold that line seriously and protect also the trust fund assets for all of the members so i appreciate that and thank you very much and happy new year to everybody. >> thank you. >> [inaudible] whiner. happy new we're to members of the board and those absent today on the board. i want to make up what claire zvanski stated. i think it's good to have a trust fund in time of emergency. suppose there is an earthquake, a disaster and the trust fund and the assets of the health services system are going to be severely taxed. you need a ready reserve for that. also in the case of epidemics or something like that and affect
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workers and you need that solvency and i think it's unethical people in city hall want to raid the fund and it's not a slush fund and i like the integrity of the board and protecting that fund and it's one of the oornd missions of the board and i want to back up what was said previously and i thank you. >> thank you. >> dr. ghotbi. >> i appreciate the comments of both speakers and i think with the guidance of our cfo we are making sure every asset of the trust fund is well documented and its purpose is clear so we have been doing i think for the board has seen a better job of making sure we are clear on the contingency reserves and all of the different reserves that are required for the work that we do to make sure that the risk is
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mitigated. i would also add that the conversations that claire zvanski was referring to do continue and there is always the ongoing conversation what should be funded through the trust and what through the general fund and we will continue to make sure that line is maintained. >> thank you. any other public comment? seeing none item number five. >> item five action item, final report on kaiser negotiations with recommendation for funding structures to evaluate during rates and benefits process. [inaudible] >> good afternoon. neil kosher and [inaudible] hewit and come up shortly as a presentation. i will share with the board and people that are here to hear
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this today. it's a pleasure to be part of this process and i turn your eyes to the executive summary. before i get into the majority of the deck i want to summarize and this presentation is the work of hss and kaiser and aa hewit over the last five months and driven by xaserated but a negotiation with kaiser permanententy and there were items to be discussed through the meeting and before i proceed i call staff from hss to say a few words about the process and with that peter. >> i would like to ask sf gov to bring up the presentation on the television. thank you.
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>> thank you for having us here today and thank you lisa to open up with a few questions. i think it's obvious but i have to say you're a very important customer to us if not the top customer in california. we understand your concerns around affordability and issues in the past and transparency and reporting. we have been working hard over the last months to establish a high level trust and improve the relationship with hss staff and other leaders here in san francisco. we believe we have demonstrate a high level of engagement and flexibility with hss staff and brought in senior leaders from kaiser permanente to better explain the company and we have a team to serve you and hss and many of them are here today. we're committed to
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continuing to serve city and county of san francisco hss and this board and we're committed to just not talk about affordability but actually demonstrate it. we are the lowest cost plan for you but we know it's not good enough and you expect more from us. we also understand that you face economic challenges and we need to be part of that solution and not part of the problem. i know that last year's renewal process was difficult for everyone. i believe that we have a dramatically different set of meetings in the last six months and with staff and several commissioners we have made tremendous progress. i feel that we have a better understanding of each other and working relationship. you have very high expectations of kaiser permanente and you have worthy goals as a board and as a staff and for the industry. we believe that we are part of that solution and we want to help you further achieve your goals. thank you for having us as a
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partner and we look forward to the next several months working together. >> i would really add to that and say this was a difficult task. we started with difference of opinions, business needs that not align in some areas and in some areas very far apart in the discussions but kaiser brought in strong and experienced representatives to the table. hss benefited from having both and commissioner scott and president breslin at some of the key and participating in the meetings and kaiser and discussing every issue. discussioning this with the executive leadership demonstrated a these negotiations and positive with the health system. i think we leave this phase of the negotiations with very high level of confidence that we
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will refine a positive path forward in our partnership with kaiser, both on our pricing and charge concerns, but as importantly on a new and more engaged partnership to improve the health of our members and i will say more about that with goal four and five but i am happy where we are today and we will let neil walk us through the different goals and where we leave this phase of the negotiations. >> neil kosher. not to digress. there are copies on the board, item five, so we have to work from your packet. >> [inaudible] >> okay. let's turn to page one, the executive summary. i will briefly go through the items. we will look at funding structures in terms how they can address some of the items brought to the attention of the board of supervisors in may and
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some of the items are the icn, profit pledge and the price guarantees and fee schedules so i won't belabor the point. why are we look at funding structures to sort of talk about why this helps with the differences of opinions within hss and kaiser? well, the funding structure can do things like take away any kind of what is considered overly [inaudible] premiums, it can allow you to take risk and that happened with blue shield and you did that and the premium under blue shield and i argued it should be lower and turns out i got lucky and not to digress into blue shield -- but why not? i am up here, so the question is we're at fully insured structure and we want to propose to the board of consideration whether or not to take risk as a way to reduce
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margins, increase cash flow and increase the admitted assets to the trust what we heard about before and increase the cash and the overall cost for kaiser's coverage so there are three options on the table from kaiser. risk sharing arrangement. they pay the premium. we look at the experience and reconcile that to 180 days after the year and pay the premium and by mid16 if it's better they cut a dividend check. this has a up side and down side. if the experience is worse the trust has to fund that. you can do adjustments. they do all of these different things, the retention fees and okay this was good. it was less than we
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expected. the history of this case indicates there is a possibility of receiving dividend checks and if you approve this i will bring back my analysis whether or not there is potential to gain from one of the alternative funding arrangements. the other two are flex funding. that works exactly like blue shield. you create the premium equivalent so you now own the premium. if you believe it should be $500 and they say 507 and you pin the premium and do it at $500 and premium for all of the people presented by kaiser and the analytics are owned by us and you own the premium and then you can build assets in the fund and you decide what the premium is next year over the experience and
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this say model and the other one is pure self funding. same basics as flex funded but under pure self funded you are truly self funded. under flex it's a contract. you're with blue shield with a contract and pay taxes to the federal government for health care reform. under this you have the max flexibility. there are no federal tax or other tax and you save money. conversely if you do self funded at the end of the exercise you have to may a surcharge administration fee because they independently administer the claims so those are the options on the table and we go to the next page and do any of these address the items outlined on page one of this document? so if we go on this -- is there capped profits?
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and fully insured -- the answer is no. if you go to self funded the answer is yes because you don't have any profit in the product. you don't pay a little premium. you pay what you spend, what the services cost, so if you believe in the fee schedule that's all you pay for at the end of the day. some of the other ones that were concernings is limitations on cost increase, the third item down. the answer is if we get a fee schedule that we believe in and we feel good about it and we have a hard fee schedule at least we know what it's going to be cost and they're not set until the fall so there is no negotiated fee schedule but we will have a sense of what it will be and another question presented in the may document by hss and cap icm at 10%? no we cannot fix a
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number but we can have a variable icn so if the claims -- the literal claim spent is less than the predetermined target should be -- 5% less and a percentage relative to that amount and the claims go down it will be less so this is a lot of information how this structure -- these funding alternatives integrate with some of the hot items brought to this board and subsequently shared with the board of supervisors. are there any questions about any of this at this time? >>i am still -- >> yes, ma'am? >> i'm a little confused between the risk sharing and the flex funding. i'm still not -- >> okay. the risk sharing you pay the agreed upon premium. it's identical to the premium
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determined by kaiser for the renewal. say it's $500. you constantly pay that money to kaiser and there is a reconciliation and in your case it's several hundred million dollars at the end of the day and we have a formula we agree on and the claims and the ad min and other issues are $275 million and they owe you $25 million and you get that when the reconciliation is done. i bring it to you. good news and a good call to do risk sharing and the dividend check and do we use it to determine the future or bring it under the trust? under flex we set a premium equivalent and used to set the contributions and bring money into the trust but at the end of the day you only pay
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claims. you pay claims and other numbers like decappations and you have a e quill length and this is what we have to charge for this. at the end of the day you benefit from this on a real time basis so if you set the two numbers you would get the money sooner under flex because you get real time money where you're covered and under the risk share you pay the literal premium and get it 180 days. everything being equal it's a cash flow situation. fair enough? >> is the transparency the same in either? >> yeah, the transparency of knowing the claims were it's identical for those two. any comments about that in. >> i just want to add another difference in addition to the fact that the reconciliation on the risk sharing didn't happen
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until after we do the pricing for last year and reconciling last year we couldn't bring it into that year and bring it into the following year and the 180 day period is done before that is reconciled. on the flex funding it allows -- i don't think in the clear sense it's not more transparency but it's comparability which is also valuable and adds to our ability to understand the costs for the blue shield versus kaiser so the flex funding model will allow us to say we're paying this much at blue shield and this much at kaiser and the same services and maybe not a transparency that we would like but it's a comparability. >> any other questions?
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>> commissioner lim. >> on last years negotiations with kaiser one of the issues that we have -- one of the contingencies was related to [inaudible] kaiser is not willing to bring it down to 10% . what i they think -- the affordable -- [inaudible] >> i understand the question presented at 10% that for the stipulation was that the understood set of charges embedded in the icm with no further clarification at that point and time and we've had several discussions. the stipulation was it was reasonable to consider that nor more than 10% at that time. we had subsequent conversations about embedded in the icm and a box that does a bunch of things that we have a slide on. what is the reasonable number? right now the number for business
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assuming that we believe all items in that box are justified is 16% as percent of claims or 13% as a percent of premium so it's not that the icm is incredibly more expensive than the 10%. it's a difference so were we able to get the 10% agreed upon? no, sir. have we come further in our discussion if we were go to down a path of assuming risk would we agree those numbers are rational at this point? that depends when i do the arithmetic on the risk and it's about 16% now on the claim. >> are you comfortable what is in the box on the icm box? >> am i comfortable -- >> or do we have agreement what
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is in there because at that time they give us idea what is in the icm charges that we have now. do we have some comfort level? >>i was just going to say -- >> [inaudible] >> neil did pause at slide three but we were going to walk through each of the goals here and there is a slide on icm in addition to all of the other goals and maybe we could have a more in-depth discussion with that. there is still more work in that area. >> any other questions? >> commissioner ferrigno. commissioner fraser. >> i appreciate the differences but one thing you left out however is how the incentives work so once we move to a fee for service system there is no
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incentive for kaiser or any payer to keep utilization in that area down so i think we need to think long and hard before we go in the opposite direction of the rest of the world which is move away for fee for service and each of these with the guise of saving money and the except the fully insured hmo we are moving in a direction that awards more service so i want to caution this board that we have to think long and hard before we move away from a fully insured. >> thank you. >>i think that was a statement so i'm not going to say anything. fair? >> do you disagree? >> can i do this? ask can i. >> >> can i ask my colleague
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andrew and can you respond to that. >> i'm going to ask that you respond to it because i think it's a different issue and puts kaiser on the spot and that kaiser will do things differently. if you recommend a fee for service versus a decapitated what incentive does it give to the provider in those scenarios. >> they're reimbursed under the agreement and fee for service -- it wouldn't change the patterns at all. they would collect data based on the practice patterns this is what the fee for service charge rate s it's analogous to the data under the decapitated structure. they still get the same money and if the utilization goal is down and utilize it less than the average population because kaiser is adjusted by community rated -- they're a huge rated plan based on this criteria so if we turn
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out to be the people spending less than the average then it allows you to gain the margin of the activity back into the hss trust but nothing would change in my mind, and it would be just a way of accounting for actions taken and that's the same thing when we brought to the board to hss the experience showed exorbitant margins in the rate and would be in the trust now and that's the same -- >> you're making the assumption that nobody but ulc goes this way; right? you're saying we're a free rider and kaiser will be a fully insured hmo for the vast majority of it? >> you could look at that position. they're open to doing it with everybody and the problem for kaiser if everybody did it that would be a problem but that's want the situation
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at hand. the situation at hand is could this benefit the trust. if we're paying these funds and count up the fees and widgets and would have been it have been -- >> i understand how the math works but every example you have given today is one where we benefit and as our actuary it's important to remind us risk goes both ways. >> that's true. >> so to the extent our population utilizes higher -- >> [inaudible] >> that's true absolutely. >> let me go back to fee for service so i still feel that you haven't answered my question. i am curious to your answer. if you have a organization that moved from decapitation to fee for service what behavior change do you expect to see? >> from the provider? >> yes. >> well, if they went from
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decapitation to service your point is well taken and a chance to could cost more but if you do fee for service and cap the dollars which is what we're talking about and don't use the plan than the average captated person and do the difference but from a interpretation of capitation for fee of service no actuary would disagree with you. >> i guess i am confused and you write "they will pay this and plus and a real time weekly basis". >> right. >> so when you say we are just paying capitation that is inag@according to what you have written here. >>i want to say a few words and your questions are really important especially in the